DE LA RUE, the banknote printers (and part owners of Camelot) which issued a profit warning earlier this year, is halving its dividend to 12p a share and cutting back production capacity at its banknote printing factories by 25 per cent, with the loss of 500 jobs, including 375 at Gateshead, after reporting an 18 per cent drop in group profits to pounds 87.2m in the year to 31 March.
The cut-back is caused by the world-wide slump in demand. The lucrative contracts to print new note issues for former communist countries are over, while the massive contracts to print the new euro banknotes have been taken by central banks.
Sales of banknotes fell 13 per cent, profits per note by 16 per cent and divisional profits were down by 25 per cent to pounds 47m.
The cash handling division, which makes cash dispensers, safes and electronic systems for security vaults, saw profits slump by 44 per cent to just over pounds 12m.
Half the fall was due to the strength of sterling, but rising overheads, delays in introducing new products and losses in the security operations in Germany and the US also eroded profits.
De la Rue is now a market leader in producing smart cards for the UK market and sales rose by almost half. But profits slumped to just pounds 1.1m as a result of heavy investment in marketing, research and development.
Profits from associated companies including Camelot rose by 17 per cent to pounds 39m, accounting for almost half the group total.
The reorganisation will cost pounds 25m and is then expected to save pounds 9m a year.
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